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For many people, a condo may be a great choice. They are usually less expensive than single-family homes, they may be located in more convenient urban areas, and they are generally relatively low maintenance.

Condos sometime appear like single-family homes. They may have a garage, and sometimes the units are even detached, allowing you to save some money while still giving you the feel of a single-family home. Just like with newer versus older homes, there are definitely some pros and cons to buying a condo. Although they can be the hottest growing sector in a sellers market, they can also be the hardest to sell in a slow housing market.

While most single-family homes have certain unique characteristics that can be leveraged at the time of sale, many condos share similar attributes. For this reason, they can be more easily compared, tend to sell within limited ranges of similar comps, and allow buyers to comparatively shop around.

Pros to Buying a Condo or Townhouse
• They tend to be less expensive per square foot.
• They are generally more modern. Most condos have been built within the last 30 years.
• Often they include many amenities (pools, spas, gyms, tennis courts).
• Condos often have secured/gated buildings.
• It is an easy transition from renting.
• You can make almost any changes you want to the interior of your unit.
• The condo association takes care of the grounds maintenance and is usually responsible for repairs to roofs, decks, common halls, and plumbing and electrical into your unit (interior plumbing and electrical issues are the owner’s responsibility).

Cons to Buying a Condo or Townhouse
• You usually have walls that you share with neighbors (much like apartments).
• You may not have a garage or much storage space.
• You will be responsible for condo association dues. Those repairs we talked about earlier aren’t free — they are just split between all the unit owners and can range anywhere from $75 to $300 per month.
• You will have less privacy than in a single-family home. Much like in an apartment, you will have many neighbors.
• Condos generally appreciate slower than single-family homes and they are harder to sell in a slow housing market.

Newer Homes

The following are examples of what you might find — there will be older homes with these items and newer homes without them.

Pros
• They often include modern amenities (some with warranties) such as central heat and air, automatic garage-door openers, garbage disposals, and dishwashers.
• Room sizes are usually larger.
• There is usually more counter space in the kitchen.
• They generally include a laundry room.
• They come with more closet space.

Cons
• They are built on smaller lots.
• You will have closer neighbors.
• They might have less charm than older homes.
• They are generally inmore rural or suburban areas.

Older Homes

Again, the following are simply examples of what you might find — there will be older homes with these items and newer homes without them.

Pros
• You will often find a lot of building character (molding, paneled doors, hardwood floors).
• They may be less expensive.
• They are built on larger lots.
• You will have more privacy.
• They are often found in older, more established neighborhoods.

Cons
• They have smaller rooms.
• They come with less storage space.
• They may need more upkeep and maintenance.
• They will eventually need updated kitchens, baths, plumbing, and air and heat if these are not already done.

Homes come in all shapes, sizes, and ages. This is especially true in Maine. There are capes, colonials, ranches, New Englanders, farm houses, waterfront, old and charming, new and maintenance-free, condos, and multi-families. Deciding which type of home is best for you can certainly be overwhelming. There are some things to consider (besides style) that will hopefully help you narrow down your search to the homes that will best fit your family, your lifestyle, and your budget.

The first thing to consider is whether you need a single-story or multi-story home. Both have their advantages. With a single-story home, you generally have a more open floor plan, and for some people, not having to deal with tramping up and down the stairs is essential. For people who dread stairs, a single-story home may better fit their needs. The bonus of a multi-level home is that you generally get more square footage for a little less money. It takes less land to build up than to build out. And many of us could use the extra exercise!

Many of us are also faced with the decision of whether to buy a new(er) home or an older home. Again, there are pros and cons to both types of homes. Compare some of the differences between newer and older homes to see which of these best fits your needs.

Some homes are completely updated, while some are in need of brand new installations. Only you can determine your individual needs. If you have the time and skills to do major home improvement projects, and you are getting a good deal—go for it. Similarly, you should be careful that you are not overpaying for a house just because it has new carpet and appliances. Make sure to compare the interiors and take notes about how much you think improvements may cost (you can always get estimates later), so that you will know what you are really getting for the price.

The final step is to start comparing all of the pros and cons of each home you see. How much home do you get in one neighborhood compared to another? Keep in mind what is really included with each home. Keep a list and compare all the factors of the different homes you are looking at to help you decide which home suits your needs the most and at the best cost. Seeing as many houses as possible before making up your mind is essential. A good agent should be able to show you multiple properties in different areas and in different price ranges so you can reallymake the best decision. This is true even if you only have one day to look. We have had out-of-town buyers come and look at 10 different houses all over Maine in just one day. We took digital pictures and made numerous notes, so when they went home they were able to really think about what they wanted and what they could afford.

As you begin the process of actually looking at homes, you should start by visualizing your dream home. Write down every single feature that you would want in a perfect home. Maybe you want an extra large kitchen with an attached family room, a pool, or a large lot. Although you may not be able to find or afford some of these things, carefully considering all of your options will help both you and your Realtor® know what type of home will best suit your needs.

Once you have your list, the next step is to narrow your focus down to the items you can and can’t live without. If you are buying your first home, odds are that you won’t stay there for very long. You should be as realistic as possible, and know that you may need to sacrifice something big (such as size or location). But the important part is determining what items you can’t live without. Maybe it is a garage, a second bath, or just a place that is in move-in condition.

During this process, there will be many questions that you will need to ask yourself. Although your first home, or any home that you purchase may not be perfect, you deserve to find the home that best suits your needs at a price you can afford.

Some Preliminary Questions to Ask Yourself When Making Your Wish List

1. How long do you intend to stay in the home? The longer you intend to stay, the more important the long-term potential of a home will probably be. Although it may not be the size you need, if it has enough room for adding on at a later date, it may still be a good candidate.Also, if you are looking for a long-term home, it may be best to spend your money on a home that needs more work in the best neighborhood you can afford (thereby getting more for your money). If you are a first-time homebuyer, you will likely have more time and money over the years to make the house a true home. Conversely, if you anticipate not living in your first home for very long, finding a property in good condition for the right price may be more important.

2. Does your job allow for stability? Even if you want to find a long-term home, you must consider whether or not your job will affect this decision.

3. What are the needs of your family? If you have school-age children, you will want to consider the schools in a particular neighborhood. Will it be easy to move once your children are in school? You want to consider the difficulties of moving once your children are settled. You also want to make sure that you have enough bedrooms or maybe a yard and a basement. You may also need room for guests, a home office, or just room to expand when the time is right.

4. Where do you want to buy? Location is very important to most people. It can affect school choices, resale values, convenience, and peace of mind. You may have a perfect location in mind, but if you don’t, there are some things to consider. How far are you from schools and work? Would you spend too much time driving? Is the neighborhood quiet and family-oriented or urban and convenient? Do you prefer the suburbs, the country, or the city? You need to consider what will best fit your lifestyle. If you have medical issues, you may need to be close to your doctor or hospitals. Are there recreational activities in the neighborhood that are appealing and convenient?

5. How much maintenance can you handle? If you do not like to do home repairs and improvements, you may want to consider a new home or condo. Buying a fixer-upper is a lot of work, and any home takes a certain amount of work to keep it in good running order. If you are someone who isn’t particularly handy, you might want a home that requires as little maintenance as possible.

Once you have asked these preliminary questions, now it is time to make some decisions. Most people start by narrowing their search down to a few specific neighborhoods. Maybe you are from the neighborhood or are familiar with its schools amenities. If not, there are ways to research the neighborhood to find out if it will fit your lifestyle.

You can start your research by looking at neighborhoods on the Internet. There are sites that will give you populations, crime statistics, median incomes, recreation, and even local shopping availability.

Earlier we discussed the possibility of hiring someone to act as your buyer’s agent. A buyer’s agent is someone who agrees to fulfill certain duties to the buyer by entering into an agency relationship with them. If you are buying a home, there are many advantages to this type of relationship. You want to make sure that your interests are protected throughout the transaction. This is something that can be best achieved by hiring someone to act as your sole representative.

Buyer agency emerged in the 1980s as a way for Realtors® to provide better service to their clients. Prior to this time, agency laws generally offered many protections to sellers, while leaving buyers to their own devices. Most people believed (and laws were often written to the effect) that if the seller was paying the commission, then they were the person whose interests should be paramount. Unfortunately, this system left buyers without any real representation.

In response to this dilemma, Realtors® and homebuyers across the country began to lobby for statewide legislation to ensure that buyers had equal access to quality representation. These agency laws, as described in Chapter 1, gave buyers access to individual representation without the problem of their agents having fiduciary duties to the sellers. Such agents inform prospective homebuyers of anything wrong with a house and provide information about the neighborhood and the real estate transaction itself. Even though they are often paid by sellers, they have no fiduciary duties to the seller. In fact, they are legally obligated to both keep your information confidential and represent your interests alone in the transaction.

Having a buyer’s agent is valuable because they don’t care whether or not you buy any particular house, they just want to make sure you get a good deal on the home you do choose to buy. They are also better educated on conducting background research of properties to ensure that you are getting a good deal. Almost any agent can run “comps” (the comparable prices of similar homes recently sold in a particular neighborhood), but a buyer’s agent may also look at less common but equally important items that may affect a home’s value—such as whether the neighborhood is desirable in terms of livability and resale values.

For instance, as a buyer you may be caught up in the aesthetics of a home and forget about looking at some of the less obvious issues. One of our agents recently acted as a buyer’s agent for a couple who had found a beautiful six-year-old townhouse on the Internet and came to us to help them make an offer. After doing some background research on the property, the agent had to make the difficult decision to advise them against buying the house.

Although they were shocked at first, they came to understand the value of hiring a buyer’s agent. the agent’s research discovered several serious issues that could have had a significant impact on the resale value and, more importantly, the livability of the home. They had found out from neighbors that the homeowners’ association rules were rarely enforced, and the association itself was slow to respond to any problems in the community. There was also an empty lot adjacent to the house, which was zoned for commercial use. It was entirely possible that they could have built a supermarket or gas station right next door. After becoming better informed, the buyers were grateful that they had not purchased the property.

Another benefit that a buyer’s agent can provide is assistance in a competitive seller’s market. There is no question that the real estate market in the last few years has undergone a tremendous surge in home buying. Low interest rates and easy-to-qualify loan programs have created a highly competitive market for homebuyers. Having a buyer’s agent can be very useful if you are trying to outbid other buyers in a multiple offer scenario. In fact, if you are buying in a competitive market, you shouldn’t even consider any other type of representation. A buyer’s agent can help you structure an offer in such a way that it will get more attention by using better terms, less contingencies, or a price that suits both your needs and the seller’s desires.

A buyer’s agent can also be useful as a source of references for inspectors and mortgage brokers. Buyer’s agents generally work with teams of people that work together to make sure that you are well represented in all aspects of a real estate transaction. Beware of the fact that any agent can say they represent buyers. But without some kind of formal training or designations (see Chapter 1), there is no way to know if the person actually has any specialized knowledge regarding buyer representation. Having a buyer’s agent represent you throughout a purchase is like having a sophisticated negotiator on your side. There is no compensation difference between hiring a regular agent, or a buyer’s agent, so there is no reason not to make sure that you get the best representation and protection.

There is no doubt that the satisfaction of being an “owner” is one of the most wonderful aspects of buying a home. Knowing that the home you live in is completely under your control is very empowering to most people. If you want red walls, you can have red walls. If you like hardwood floors or you want to turn two small bedrooms into a large master bedroom, the decisions are yours to make.

Equally as important is the knowledge that any money you do spend on your home can be seen as an investment. New appliances or granite countertops generally add money to the resale value of your home. A home is one of the few investments in life that serves a purpose larger than the investment itself. It’s not just money in the bank, it’s a roof over your head.

Another important benefit of owning your home is being able to deduct the interest on your mortgage payments. This may be a larger financial gain than you think. Let’s say for instance that you have a $200,000 mortgage on your home. If you take out a 30-year fixed rate loan, for the first five or more years of that loan you will almost exclusively be paying the interest on the loan. This is because banks want to ensure that they get paid, even if you don’t keep the home for a long period of time. So banks charge the majority of the interest on your loan up front. If your monthly payment is $1,100, there is a good chance that about $1,000 of that payment is interest. Therefore, at the end of the year you could have a $12,000 deduction. That’s no small change.

Although there is no guarantee that your home will go up in value, if you are in a home for a long period of time, there is a good chance that you will also realize a decent appreciation in the property’s value. This means that there are two ways for you to build equity in your home. You can build equity by paying down your mortgage, or you can gain equity by the increase in the value of your home. You can then refinance (get a new loan at a higher amount, or get a credit line based on your equity) to buy other properties, fix up your home, or even send your kids to college.

However, there are potential drawbacks to home ownership as well. When you rent, if the light doesn’t turn on, or the toilet is no longer flushing, the first thing you do is call your landlord. If your landlord is any good (and complying with the law), they will quickly send someone to your home to repair the problem. If all goes well, this situation can create a pretty carefree way of life. The landlord may make the profit from your rent, but they also handle most of the hassles involved in maintaining the home. The same is not true when you are a homeowner. The house is yours to improve, but it is also yours to deal with when something goes wrong. If you have some basic skills, this may not worry you, but if you aren’t very skilled at fixing things or simply don’t have the time, you may be in for some big surprises. You will also need to be prepared for maintenance such as lawn mowing, snow shoveling, and roof leaks.

But don’t let us scare you away completely. If you would like to buy your own home, but are concerned about its condition and on-going maintenance, there are some things you can do. First is the fact that you have the right to have a thorough home inspection before you buy any property. A home inspection provides you with the opportunity to find out exactly what condition a home is in before you buy it (see Chapter 8 of our book, Buying or Selling a Home in Maine). If you are not the fixer-upper type of person, maybe a new or well-maintained home might be right for you. You can also purchase a home warranty, which protects you from plumbing, electrical, and appliance issues immediately after buying a home. Lastly, you can avoid a lot of maintenance issues by buying a condo or townhouse. Even though you would be responsible for any repairs to the interior of your home; yards, fences, roofs, and often plumbing are the responsibility of the homeowners’ association.

Another reality of being a homeowner is that when you want to move, you have to sell. Depending on the market, as well as other factors, selling a home can be easy, or it can be a very involved process. Unlike renters who can just give notice when a lease is up and no longer be responsible for payments, mortgage payments don’t end until you sell your home. If you need to move for work or personal reasons and for some reason your home does not sell, then you must still make the payments on your mortgage. You can possibly find a renter, but the reality is that your payments must be made on time for the duration of your mortgage, or you will lose your house and all of the equity you may have in it. So for a person who is not sure that they will stay in one place for more than a few months, home ownership is probably not the best option.

In addition to the costs of purchasing a home, there are costs involved with selling. Consequently, if you have only owned the home for a few months and you have not built up any equity in the home nor realized any appreciation, then it may actually cost you money to sell your home. The bottom line is that short-term home ownership is risky and may not be the best decision for some people.

So now that we have discussed the ways in which you can be represented, let’s discuss what specific qualities you should be looking for in a representative. Regardless of the type of agent you work with, there are certain qualities and attributes to look for that will make all the difference in your relationship with your Realtor®.

You may have seen ads for a Realtor® in a magazine or a flyer at the supermarket, but how do you know if that is the person you want representing you in a major financial transaction? They may have a nice smile, but how much do they really know? Knowledge is the key. Just as you wouldn’t hire an attorney because they were attractive or because they said they were the best, you should likewise not hire a Realtor® based solely on an ad you’ve seen.

Three important attributes of a good Realtor® that you should keep in mind are knowledge, organization, and availability. You want to know that your Realtor® can handle the oftentimes hectic pace of a real estate transaction. They need to know what listings are out there, what forms are needed for each step of the transaction, and they should be easily accessible to you if you have questions along the way. So how do you find this Realtor®? Well, a good Realtor® can be found in a variety of ways.

The first place to start (as with any professional you are looking for) is to get recommendations from a family member, friend, or colleague. Keep in mind, however, that it is important to find out what they liked about the person they are recommending. It is possible that you are looking for a different type of Realtor®. They may have loved their agent because they had an aggressive style and fought for every penny on their clients’ behalf, while you may be looking for someone who is easy to talk to and who will hold your hand throughout the process. Just make sure that your referral source is someone you trust and whose advice you value.

Another way of finding a Realtor® is to look for someone in your area who is known for being extremely knowledgeable on real estate. These people are often quoted in the real estate section of the paper, or on radio talk shows or television. Although thismay not tell you much about their character, it does give you a good idea of their level of knowledge. You can then meet with them and find out if they fit your other important criteria.

You can also talk to the “designated broker”, owner, or manager of a local real estate firm for a referral. Describe to them the kind of agent you are looking for and what your specific needs are. A good designated broker will know their agents well, the areas they specialize in, who is perhaps too busy at a particular time, and so forth. They want you to be happy and to refer other people to their brokerage.

The bottom line is that regardless of how you initially find your Realtor®, this is just the first step in the process. Before you hire any representative, you should meet with them, ask them questions, and then decide if they are the right representative for you. Taking the time and making the right decision up front can save you the hassle of looking for new representation in the middle of the buying or selling process.

Disclosed dual agency occurs when an agent represents both the buyer and the seller in a transaction. This may seem like an awkward arrangement, but there can be instances when you hire a buyer’s agent and it turns out that they get a listing that just happens to be your dream home. Because of the conflicts of interest that can occur in such a situation, Maine has very strict laws governing disclosed dual agency. One requirement is that both parties must be given a full disclosure about the nature of this type of relationship, and they must both agree to a disclosed dual agency relationship in writing.

In a dual agency situation, the agent is still held to all of the duties required as a single agent, except that they must not disclose to the parties:

• the willingness or ability of the seller to accept less than the asking price;
• the willingness or ability of the buyer to pay more than has been offered;
• confidential negotiating strategy not disclosed in the sales offer as terms of the sale; and
• the motivation of the seller for selling and the motivation of the buyer for buying.

In addition, the agent must not take any action that is adverse or detrimental to either party’s interests in the transaction, and they must obey the lawful instructions
of both parties.

In Maine, disclosed dual agency exists when an agent within a “single firm” represents both parties to a transaction. As a general rule, a “single firm” may operate one office or many offices, but it is usually determined by company ownership. If more than one office has the same owner, it is generally considered a “single firm.” It is “appointed agency” when the parties agree to designate one agent for the buyer and one for the seller within the same “single company.” A buyer can be “unrepresented” (an agent must be honest but cannot give advice), or find another agent outside the “single company.” Although this may sound confusing, all of these relationships are described in detail in Maine’s agency disclosure form that you are required to be given at the very first substantive conversation about real estate.

When you enter into a relationship with a Realtor®, it is important that you understand their role in the transaction and their responsibility to you. In the business, their obligations are typically defined by an “agency relationship.”

We should start by defining the term agency as used in this section. An agent is someone who represents your interests in a particular transaction. In Maine, when someone acts as an agent for a client, they assume certain legal obligations on behalf of that client. There are various reasons why you might choose to hire an agent rather than representing yourself. The primary reason is that an agent is generally more knowledgeable on a particular subject matter than you are. No one can be an expert in every area. For example, if you were in need of legal help, you would most likely hire a lawyer. Or if you needed advice on buying a business, you might hire a business consultant. These professionals are usually better educated and better equipped to deal with particular transactions; therefore, you would hire them to represent you and look out for your best interests.

Another reason you might hire an agent is because you are physically unable to represent yourself in a particular transaction. This might be true if you are in another state and cannot personally oversee your affairs, or if you do not have the time to devote to overseeing a particular project. For example, you would probably hire a property manager to oversee an out-of-state investment property.

An agent is given the authority to act on your behalf in reference to a particular transaction. Hiring an agent to represent you in a real estate transaction follows the same lines of logic. An agent is generally more educated and better equipped to handle a real estate transaction than you are. It may benefit you to hire a Realtor® to act on your behalf in order to protect your interests in what is likely the largest investment of your life thus far.

Prior to the enactment of buyer agency laws in real estate, agents generally only represented sellers. You may not have known this going into a transaction, but agents
were paid by the seller so their only job was to sell the home. Buyers had no one looking out for their interests and ensuring that they got a fair deal. State legislatures eventually caught on to this discrepancy and created agency laws to make sure that each party to the transaction had a chance at representation. These new laws ensure that all parties are informed up front about who represents whomand what each representative’s responsibilities are.

If you are in the position of having to sell your old home while trying to buy a new home, the timing can be hard to gauge. Should you wait until you are under contract with a buyer before you start looking for your new home? And if you wait too long, could you miss out on that perfect property? Don’t panic. Like all other aspects of buying and selling real estate, planning is everything. Have a backup plan in place for what you will do if your old house is sold before a new one is found. Or conversely, make a plan for how you will deal with potentially owning two homes for some period of time. Your choices will be largely dependent on the market and your flexibility.

In a buyer’s market you may want to wait to look for your new home until you are under contract with a buyer. There are several reasons for this. First of all, if you find a new home before you sell your current home and it then takes 90 days or longer to sell your home, you could be faced with two mortgages. This financial hardship could not only hurt your savings, it could also affect the financing of your new home (unless you use the equity in one home to finance the other). If it is also a buyer’s market where you are moving, you may be able to make your new purchase contingent upon the sale of your old home.

Secondly, if the idea of two mortgages is unrealistic for your financial situation, you could panic and unnecessarily sell below market. In the end, this could cost you much more than the price of temporary housing.

Another choice available to you in a buyer’s market is to find a new home and then rent out your old house until it sells. Keep in mind, however, that houses with renters are often harder to sell. The reality is that renters don’t usually take care of a home like owners and, therefore, it never “shows” as well to potential buyers. Buyers are also reluctant to deal with the potential of evicting someone from their home if the tenant refuses to leave after the sale.

In a seller’s market, it is usually best to sell first and then have a game plan if you don’t find something right away. This way, you can make the most of the market situation. Double moves can be expensive and inconvenient, so you can try leasing back your old house for a short period of time. You can also try putting your items in storage and staying with friends or relatives for a short period of time. Your Realtor® will know your needs best, and they can often be a very good source for finding affordable short-term housing, especially if you have children or pets. Although these choices may seem daunting or expensive, if you plan ahead they may save you the anxiety of owning two homes.